Best Countries For Business 2018: Behind The Numbers

Kurt Badenhausen
,
Forbes Staff
I cover sports business with rare dips into b-schools, local economies

Forbes has rated the business friendliness of the world’s biggest economies annually for the past 12 years. The United Kingdom gets the top rank this year for the first time, up from fifth last year.

We determined the Best Countries for Business by rating 153 nations on 15 different factors: property rights, innovation, taxes, technology, corruption, infrastructure, market size, political risk, quality of life, workforce, freedom (personal, trade and monetary), red tape and investor protection. Each category was equally weighted. We only included countries with data across at least 11 categories. The U.K. ranked among the top 25 countries in each of the categories except political risk where it ranked a couple of spots lower.

We used the World Bank’s Doing Business report to grade countries’ taxes, investor protection and red tape/bureaucracy. Qatar and the United Arab Emirates finished tied for first on taxes with Venezuela at the bottom of the 153 countries in our final rank (the U.S. was No. 36 ahead of its new tax plan on businesses). Kazakhstan was tops for investor protection with Afghanistan ranked last. New Zealand was first for red tape and (and second overall) with Venezuela finishing last. Venezuela also finished last for monetary freedom.

The Heritage Foundation’s Index of Economic Freedom provided the basis for our ratings on trade freedom and monetary freedom. Singapore, Hong Kong and Switzerland tied on top for trade freedom with Zimbabwe ranked last. Hungary repeats as the best for monetary freedom. Personal freedom ratings came from Freedom House’s Freedom in the World report, which deemed more than 30 nations to be the “most free” and Saudi Arabia and Uzbekistan to have the lowest ratings.

Ratings on technological readiness, innovation and infrastructure came compliments of the World Economic Forum’s annual Global Competitiveness Report. Luxembourg was first on technology with Switzerland the leader in innovation. Chad and Haiti bring up the rear in those categories. Hong Kong led the infrastructure metric and Malawi ranked last.

We used the Property Rights Alliance’s International Property Rights Index to gauge property rights, which was led by New Zealand. The corruption rankings were culled from Transparency International’s widely followed Corruption Perceptions Index with Denmark and New Zealand tied on top and Libya and Yemen sharing the bottom (Yemen rated worst for property rights also).

We tweaked our methodology this year for the first time in a decade after conversations with multiple site selection experts. Stock market performance is out and we added workforce, infrastrustrure, market size, quality of life and political risk.

Workforce was based on the size of the labor force and its growth from data from the World Bank. We also factored in the education capabilities in the country per the WEF. The U.S. was first with Suriname last. Market size is strictly a function of gross domestic product. The U.S. is tops again at $18.6 trillion, while the Gambia has the smallest economy we ranked at $1 billion.

Quality of life ratings came courtesy of the United Nations’ Human Development Index. It weighs life expectancy, years of schooling and gross national income per capita. Norway is first and Chad last among the 153 countries we ranked. Political and terrorism risk data is based on studies from Marsh & McLennan and Aon. Norway was deemed the lowest risk with Yemen and the Democratic Republic of the Congo carrying the most risk.

The CIA’s World Factbook and the World Bank were used for economic data and the country profiles.